The Uniform Law Commissioners are planning a conference in Chicago to address inconsistencies in state regulation of debt counseling and management services. The conference is scheduled to be held November 16-18, 2007 in Chicago. To date, only a small number of states have enacted the Uniform Debt-Management Services Act (“UDMSA”), which the Uniform Law Commissioners promulgated in 2005. The UDMSA applies to both consumer debt counseling services and debt management services and, among other things:

    • Requires registration of debt-management service providers;
    • Requires disclosures of fees and services to be offered and the risks and benefits of entering into an agreement;
    • Requires providers to offer counseling services from a certified counselor and create a plan in consultation with the counselor
      for debt-management service to commence;
    • Sets the contents of agreements and fees that may be charged;
    • Provides debtors with a three-day right of rescission and the ability to cancel an agreement within 30 days;
    • Permits providers to terminate an agreement if required payments are delinquent for at least 60 days;
    • Requires providers to keep debtor payments in a trust account;
    • Prohibits providers from performing certain acts, including misappropriating funds in trust, settling for more than 50% of a
      debt without a debtor’s consent, offering gifts or premiums to enter into an agreement and representing that settlement has
      occurred without certification from a creditor; and
    • Establishes remedies for violations, which may include injunctive relief, civil penalties up to $10,000 and private rights of action for compensatory damages, triple damages, punitive damages and attorneys’ fees.